Life Science Compliance Update

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February 16, 2012

Physician Payment Sunshine: Friday Deadline Approaching and AAFP Comments Raising Concerns to CMS

This week marks the last week that the public can submit comments on the proposed regulations that will implement the Physician Payment Sunshine Act—Section 6002 of the Patient Protection and Affordable Care Act (PPACA).  Comments are due this Friday, February 17, 2012.  It is simple to submit a comment by simply pressing here

Consequently, groups have already begun submitting their comments, including the American Academy of Family Physicians (AAFP), which represents more than 100,300 family physicians and medical students nationwide. 

The AAFP supports and values transparency and the goal of the Sunshine Act as it can help the public and policymakers understand the dynamic relationships between health care professionals and the medical industry. AAFP recognized however, that the proposed reporting requirements create significant complexities, such that CMS estimates it will cost healthcare companies and health care providers $224 million in the first year, and over $163 million annually thereafter to comply. AAFP offered the following recommendations to improve the final regulation. 

Need to Ensure Accuracy 

The AAFP policy on transparency explicitly states that any reported information needs to be easily verified for accuracy.  The group asserted that the proposed rule “fails to address adequately the need for robust safeguards so that CMS posts only accurate information online.”  Erroneous and potentially negligent reporting practices could be misleading and have severe implications for a physician's credibility with patients.  The AAFP therefore encouraged CMS to reexamine the agency’s role and responsibilities to prevent the dissemination of inaccurate or disputed data. 

They urged CMS to establish a uniform, national, and mandatory data verification and arbitration process.  This should involve an ongoing pre-review ability so physicians can easily identify and quickly resolve conflicts before inaccurate information becomes publicly available.  AAFP does “not support any proposals that attempt to sidestep inevitable disputes by merely publishing both the applicable entity’s reported value and the physician's self-reported amount.” In addition, AAFP wants CMS to structure the review and arbitration process such that physicians do not incur legal fees to defend themselves from erroneous manufacturer reporting. 

Indirect payments 

Section 6002 of the law specifically states that reportable transfers of value do, “not include a transfer of anything of value that is made indirectly to a covered recipient through a third party in connection with an activity or service in the case where the applicable manufacturer is unaware of the identity of the covered recipient.”  Accordingly, AAFP expressed its concern “that CMS commentary in the proposed rule discusses indirect transfers of value.” 

AAFP was involved in legislative negotiations that ultimately resulted in the Affordable Care Act, and is aware that previous versions of the underlying bill included language that considered indirect payments a reportable event.  However, since the statute was intentionally finalized to specify that indirect transfers of value are not reportable events, the AAFP asserted that CMS does not have the authority to expand beyond the scope of the law and propose policies that require in any circumstance that an indirect transfer of value be reported. 

AAFP explained its commitment to supporting physicians’ continuing professional development and lifelong learning, including participation in certified or accredited Continuing Medical Education (CME), some of which are supported by industry through a rigorous grant review process.  AAFP recognized how 1) direct payments to physicians (either in the role of faculty or attendees) by companies, in the context of Accredited and Certified CME, are prohibited and therefore are irrelevant when it comes to disclosure under Section 6002; and 2) manufacturers have no relationships with CME faculty, either directly or indirectly.  They also noted how AAFP strictly adheres to the “Standards for Commercial Support (SCS): Standards to Ensure the Independence of CME Activities” of the Accreditation Council for Continuing Medical Education (ACCME). 

AAFP strongly supports having safeguards in place to ensure CME independence, validity and relevance and has instituted guidelines and policies to provide for physicians, whether learners or faculty, the assurance to clearly identify CME programs that are ethically sound, evidence-based, scientifically objective, clinically relevant, and educationally effective. The AAFP has consistently implemented a variety of strategies and mechanisms to manage relationships between CME and industry, in order to identify, disclose, and mitigate real or potential conflicts of interest. The AAFP closely monitors its adherence to the ACCME SCS, and compliance with SCS is a requirement for their credit certification.  In addition, the AAFP adheres to other pertinent standards, laws, regulations, ethical codes, guidelines and considerations that enhance our ability to ensure the identification, disclosure, and resolution of real or perceived conflicts of interest. 

As a result, AAFP strongly urged CMS to clarify in the final rule that all certified and accredited CME activities are excluded from reporting.  

In addition, AAFP recognized how it receives support from industry for programs that aim to advance the value of family medicine by promoting humanitarian, educational, and scientific initiatives that improve the health of all.  AAFP maintained that, “If funds from the medical industry are contributed to the AAFP or the AAFP Foundation they are considered reportable under Section 6002, these important efforts could be hampered because physician interest would likely decrease.”  For example, efforts that could be less appealing to members might be: 

  • The AAFP Vaccine Science Fellowship - funding supports focus group research designed to identify barriers to immunizations.
  • The Office Champions Tobacco Cessation Project - funding covers clinical time spent on chart reviews, evaluations, staff training, writing clinical content for practice manuals, or leading training sessions. Participants’ practices complete a W-9 form and provide their Employer identification number.
  • Americans In Motion—Healthy Interventions (AIM-HI) – grant funds are used to pay family physicians to present at AAFP conventions and conferences on the subject of fitness. The AAFP (not the funding entity) decides which physician is selected to present. 

Accordingly, AAFP urged CMS to specify that only direct transfers of value to physicians are reportable events because this would establish a clear distinction between reportable and non-reportable transfers of value and significantly simplify compliance with Section 6002 requirements. 

Meetings and Conventions 

AAFP commended CMS for eliminating the reporting of any offering of meals, snacks, or coffee at medical industry conferences, booths or events where CME certified or accredited educational materials are offered.  However, AAFP stated that CMS should clarify in the final rule that speaker fees for accredited and certified CME programs should not be considered reportable events since these are indirect payments and covered under ACCME SCS. 

The Medical Practice 

AAFP requested that CMS expound further and offer supplementary examples of both reportable and non-reportable events that can occur when a manufacturer’s representative meets with the medical practice.  

In addition, AAFP strongly objected to the CMS proposal that, in instances where group meals are being provided in a group setting (for example, buffet style food in a physician’s office), applicable manufacturers report the cost per covered recipient receiving the meal even if the covered recipient does not actually partake of the meal. AAFP asserted that this kind of reporting “will result in inaccurate and misleading reporting.”  As a result, AAFP urged CMS to specify that Section 6002 reporting requirements only apply to physicians that personally decide to accept such transfers of value from applicable entities. 

AAFP also expressed its extreme concern with the proposed 45-day review period.  For such a new and complicated program, that time-frame “is simply too brief for a practicing physician to access, review, and then potentially appeal a detailed financial document.”  The AAFP appreciates that CMS recognizes this is problematic since the proposed rule discusses that “it may be difficult for CMS to contact covered recipients and physician owners or investors, since they do not actively participate in the data submission process with CMS prior to their review, so we propose to notify covered recipients and physician owners or investors in a few ways.”

Consequently, AAFP said “it unreasonable to suggest that practices must habitually find and check various CMS websites or electronic newsletters for updates on their transparency reports.  Placing this unnecessary responsibility onto the practice will consume a tremendous amount of valuable time and resources that should be spent on patient care.”  Instead, the AAFP urged CMS to work with physician organizations to strengthen and lengthen the review process. 


AAFP also expressed its concern that reporting requirements could deter physicians’ willingness to conduct medical research.  It is the AAFP’s position that shedding light on the nature and extent of financial relationships between physicians and applicable entities in “no way should interfere or disrupt clinical research.” 

Physicians conducting clinical medical research have direct financial relationships with their academic institutions.  These institutions may receive support from applicable entities, but the AAFP encouraged CMS to specify in the final rule that Section 6002 reporting requirements do not apply to clinical research when funds are indirectly made to the researcher. 

In addition to specifying that indirect transfers of value are not reportable events, the AAFP also urged CMS to specify in the final rule that approved clinical research subject to “human subjects IRB review” is excluded from these reporting requirements since most clinical research already requires that financial ties to manufacturers be disclosed. 

Consumer Website 

AAFP strongly urged that the content of the information published on the website be promulgated as a proposal with the opportunity for public comment to be sure that the information is useful and unbiased.  AAFP maintained that “CMS must avoid casting an unfavorable or incomplete light on the appropriate collaboration that exists among physicians, teaching hospitals, and industry manufacturers.”

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